Oil and Gas Price Fraud Working Group aims to take the air out of the gasoline price parachute

To call the administration’s Oil and Gas Price Fraud Working Group a circus clown’s balloon would insult clowns and their balloons, but there are certainly similarities: both are capable of being twisted this way and that, both are filled by hot air, and both are wholly lacking in meaningful economic content.

Q In April of 2008, President Obama — or then candidate Obama appeared at a gas station in Indiana — gas was at $3.60 a gallon — said we need to vote for change, a new set of policies. He’s returning to Indiana now with gas well over $4.00 a gallon. What does it say about the success he has had over the last three years in dealing with the fuel issue, the gas issue?

MR. CARNEY: Well, I think you’ve heard the President speak quite a lot lately about the impact of high gas prices on Americans’ pocketbooks and wallets. We’re very concerned about it. We do note the steep drop in oil prices in the last couple of days. And I would also note that one of the things the Attorney General task force will be looking at is coordinating with state attorneys general to make sure that we don’t have a what I’ve heard described as a “rockets-and-parachutes phenomenon,” where prices at the pump rocket up when oil prices rocket up, and yet they come down in a parachute fashion when oil prices go down. So we want to make sure that a drop in oil prices is appropriately reflected in a drop in gas prices at the pump.

Q Does the President believe gas prices will drop in the coming months? The futures market seem to be indicating they will.

Frank, I checked it out. Lots of speculative discussion about speculation, but not a lot of understanding of how futures markets work and are used. Selective use of facts (for example, illustrating the “correlation” between the “unregulated” trading in oil on ICE using the March 2008 contract, which looks like ICE trading caused the price to rocket, illustrating the claim; why not, say, the October 2008 contract, which similarly went up until it stopped and went down sharply. Or did ICE stop trading in oil in Mid-July, causing prices to go down, then start up again in November 2008, causing prices to go up again? The analysis is just not reliable.)